At a glance – key takeaways
In a recent judgment, the Frankfurt Regional Court (Landgericht Frankfurt) held that an English Part 26A restructuring plan could not be recognized and given effect in Germany. It is important to note that the judgement is a provisional judgement only rendered in a special documentary procedure ("Urkundenprozess") in which evidence is generally limited to documents and records. The provisional judgement is therefore subject to subsequent proceedings in which evidence which was previously barred is admissible. In addition, the judgement of the Frankfurt Regional Court (Landgericht Frankfurt) is subject to appeal at the Frankfurt Higher Regional Court (Landgericht Frankfurt) and, if admitted, the German Federal Court of Justice (Bundesgerichtshof).
As regards the substance of the provisional judgement of the Frankfurt Regional Court (Landgericht Frankfurt), the court refused recognition of Projekt Fürst's restructuring plan as an insolvency proceeding pursuant to section 343 of the German Insolvency Code because such restructuring plan lacked full collectivity, i.e. did not constitute an arrangement affecting all creditors of the debtor. The Frankfurt court also refused recognition as an ordinary civil matter judgement pursuant to section 328 of the German Code of Civil Procedure because the required reciprocity between verdicts of German and English courts could not be proven in such special documentary procedure ("Urkundenprozess").
Although the judgment, unless overturned in subsequent or appeal proceedings, may render the recognition of Part 26A restructuring plans in Germany more challenging, the recognition of Schemes of Arrangement under Part 26 of the Companies Act should not be affected. In the recent judgement in the matter of Standard Profil GmbH ([2025] EWHC 2313 (Ch), the English High Court held that the reasoning of the Frankfurt Regional Court, even if it was correct and confirmed in subsequent and appeal proceedings, should not have any bearing on the recognition of Schemes of Arrangement as such verdicts are capable of being recognized under the Hague Convention or the Hague Judgements Convention.
Background
On 22 August 2025, the Frankfurt Regional Court issued a provisional judgment (Vorbehaltsurteil) in which it declined to recognize, and give effect to, an English Part 26A restructuring plan in Germany. The case arose from the restructuring of Aggregate's real estate investment "Project Fürst" in Berlin, held by Luxembourg companies Project Lietzenburger Straße PropCo S.à r.l. and Project Lietzenburger Straße HoldCo S.à r.l. (the "Plan Company"). Although the Part 26A restructuring plan had been sanctioned by the English High Court in March 2024, the Frankfurt Regional Court did not recognize it and gave no effect to the deferral of the maturity of a certain German law governed senior loan agreement by two years from 2023 to 2025 pursuant to the sanctioned restructuring plan. Consequently, the Frankfurt court held that a creditor's claim of EUR 5 million under such senior loan agreement remained due and payable.
The Plan Company faced acute financial distress due to significantly increased construction costs. It shifted its center of main interests (COMI) to England in order to establish a sufficient jurisdictional nexus for the purposes of proposing a restructuring plan under Part 26A of the UK Companies Act 2006. The plan envisaged extending the maturity of approximately EUR 775 million of senior debt by two years, writing off approximately EUR 250 million of subordinated junior debt and facilitating the injection of new super-senior funding.
In considering whether the Part 26A restructuring plan would be recognized in Germany, the English High Court heard expert witness statements on German law and ultimately concluded that the Part 26A restructuring plan should be capable of recognition. The High Court issued a sanction ruling approving the Plan Company's restructuring plan on 7 March 2024.
The Frankfurt Court Decision
The Decision
The Frankfurt Regional Court considered three potential avenues for recognition under German law (see below for further details):
- First, the Frankfurt Regional Court rejected recognition under section 343 of the German Insolvency Code, holding that the English Part 26A plan did not constitute a "collective insolvency proceeding" because it did not encompass all creditors. It is noteworthy that this is the exact opposite of the finding of the High Court in Project Fürst's Part 26A restructuring plan (see above).
- Second, the court found recognition under section 328 of the German Code of Civil Procedure to be unavailable because the defendant failed to establish that reciprocity existed for the recognition of German court verdicts in England. Due to the limitations of the documentary procedure process in which the Frankfurt Regional Court handled the case, the court did not admit expert evidence on reciprocity and therefore did not make a substantive decision on this subject.
- Third, the court held that recognition under Brussels I Regulation (recast) was unavailable because the Brussels I Regulation (recast) no longer applies to English judgments post-Brexit.
Procedural Remarks
It is important to note that the Frankfurt court rendered its decision pursuant a documentary procedure (Urkundenprozess). A key feature of the documentary procedure is that facts must be proven by documentary evidence only. Witness testimony and expert opinions are not permitted, neither for the claimant nor for the defendant. The issuance of a provisional judgment does not conclude the proceedings, but the case automatically proceeds to so-called subsequent proceedings (Nachverfahren) before the same court of first instance. In these subsequent proceedings, the limitations of the documentary procedure no longer apply, allowing both parties to present evidence according to the general rules of German civil procedure.
Based on this broader evidentiary record, the Frankfurt Regional Court may ultimately determine that the provisional judgment was incorrect and may reverse its earlier decision in a final judgment.
In parallel with the subsequent proceedings, the provisional judgment may also be appealed to the Higher Regional Court (Oberlandesgericht). Ultimately, a review by the Federal Court of Justice (Bundesgerichtshof) is also possible.
Legal Observations
Recognition pursuant to section 343 of the German Insolvency Code
The Frankfurt Regional Court held that the recognition of the restructuring plan as foreign insolvency proceedings for the purposes of German domestic law pursuant to section 343 of the German Insolvency Code must be refused.
Pursuant to section 343 of the German Insolvency Code, "foreign insolvency proceedings" are automatically recognized, unless the courts in the state in which proceedings were opened lacked jurisdiction under German law or recognition would lead to a result which is manifestly incompatible with major principles of German law. Whether a foreign process constitutes an "insolvency proceeding" is determined by reference to German insolvency or insolvency-related proceedings. It is generally accepted that the "foreign insolvency proceeding" does not have to exactly mirror German insolvency proceedings but only share the same core aim and features. Consequently, US chapter 11 proceedings are for example also generally recognized as "foreign insolvency proceedings" by German courts although chapter 11 proceedings can differ substantially from German insolvency proceedings. However, the Frankfurt Regional Court deemed that the English Part 26A restructuring process would need to be a fully "collective" proceeding in order to be recognizable as an insolvency proceeding because German insolvency proceedings involve all creditors of the relevant debtor. As the Plan Company's Part 26A restructuring plan did not involve all of the Plan Company's creditors (in common with usual practice, some types of creditors such as trade creditors were excluded), it lacked, according to the Frankfurt Regional Court, the required collectivity to constitute a "foreign insolvency proceeding".
This legal view of the Frankfurt Regional Court appears difficult to reconcile with the European Insolvency Regulation (Regulation 2015/848 of 20 May 2015). Art. 2 para. 1 European Insolvency Regulation explicitly states that proceedings which include "all or a significant part of a debtor's creditors" are also "collective proceedings" pursuant to the European Insolvency Regulation. Consequently, partially collective restructuring proceedings, like for example the German Scheme (StaRUG), are explicitly characterized as collective proceedings under annex A of the European Insolvency Regulation and are thus characterized as insolvency proceedings for the purposes of European law. Although the European Insolvency Regulation is not directly applicable to Part 26A proceedings due to "Brexit," it is widely acknowledged that the European Insolvency Regulation provides guidance, and should be used as a reference, to determine which proceedings should be considered as insolvency proceedings pursuant to section 343 of the German Insolvency Code. However, the judgment by the Frankfurt Regional Court does not engage in a discussion on this point, nor does it address the view held by a number of German legal authors that Part 26A restructuring plans should be considered as "insolvency proceedings" pursuant to section 343 of the German Insolvency Code.
Recognition pursuant to section 328 of the German Code on Civil Procedures
The Frankfurt Regional Court further held that the English sanction order relating to the Part 26A restructuring plan could not be recognized under section 328 of the German Code on Civil Procedures because the Plan Company had failed to satisfy the "reciprocity test" required for recognition of foreign judgements. Under German law, the reciprocity test requires the domestic court to determine whether German judgments would, in principle, be recognized in the foreign jurisdiction (in this case, the United Kingdom) under roughly comparable conditions and without substantial procedural obstacles.
The Frankfurt Regional Court further held that the reciprocity test required examining the legal practice of the foreign state, which it considered to be a question of fact. Due to the procedural limitations inherent in the documentary procedure (see above), expert evidence regarding the reciprocal recognition of German judgments in the UK was inadmissible. As a result, the Frankfurt Regional Court did not make a definitive determination on reciprocity but instead assumed, for purposes of the provisional judgment, that reciprocity had not been proven by the Plan Company. Against this background, this very important question was left open for determination in the subsequent proceedings.
Nevertheless, some German legal commentators have raised doubts whether reciprocity between Germany and England exists in light of the so-called Rule in Gibbs under English law, given that German law has no equivalent rule and imposes no fundamental obstacle to the recognition of modifications to claims governed by German law in foreign proceedings.
Implications and Outlook
In the absence of an appeal or subsequent verdict overturning the decision of the Frankfurt Regional Court on the Project Fürst matter or a final court ruling of the German Federal Court of Justice (Bundesgerichtshof) on the recognition of English Part 26A restructuring plans generally, there remains legal uncertainty whether English Part 26A restructuring plans are recognized and given effect by German courts. Consequently, creditors may continue to assert payment claims in Germany despite sanction orders in England approving English Part 26A restructuring plans.
However, there should not be a similar risk for the recognition of Schemes of Arrangement pursuant to Part 26 of the Companies Act due to the differences between Part 26A restructuring plans (generally considered insolvency or analogous matters) and Schemes of Arrangement pursuant to Part 26 of the Companies Act (which are generally considered not to constitute an insolvency matter).
In addition, judgements of English courts sanctioning Schemes of Arrangement pursuant to Part 26 of the Companies Act may be recognized pursuant to art. 8 of the Hague Convention of 30 June 2005 on Choice of Court Agreements ("Hague Convention") pursuant to which a judgment given by a court of a contracting state designated in an exclusive choice of court agreement shall be recognized and enforced in other contracting states. Both the United Kingdom and the Federal Republic of Germany are bound by the Hague Convention. Further, Schemes of Arrangement judgements may be recognized pursuant to the convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters ("Hague Judgments Convention"). In the recent High Court decision in Standard Profil Automotive GmbH ([2025] EWHC 2313 (Ch)), Honorable Mr Justice Meade concluded that – irrespective of the judgement of the Frankfurt Regional Court – there were two "entirely robust routes to recognition", i.e., the Hague Convention and the Hague Judgements Convention, for the recognition of Standard Profil Automotive GmbH's Scheme of Arrangement pursuant to Part 26 of the Companies Act. In the decision of the Frankfurt Regional Court on the Plan Company's Part 26A restructuring plan, the Hague Convention and the Hague Judgements Convention, had such conventions been tested by the Frankfurt Regional Court, would not have resulted in potential avenues for recognition in Germany since the relevant senior loan agreement subject to such English restructuring plan was governed by German law and subject to the jurisdiction of German courts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
